Market Pooh-Poohs Link PEXA Listing

Link Administration shareholders do not like the idea of a float for online conveyancing group PEXA that only nets $50 million in cash (perhaps a little more) for its dominant stake in the company.

It would seem a lot of Link shareholders thought that monetising PEXA via a trade sale or float would realise a poultice of cash to be paid back to shareholders.

That doesn’t seem to be the with the confirmation yesterday that PEXA could be a publicly listed company in a month after last weekend’s rapid moves to frustrate an attempted buyout by US private equity giant, KKR.

Link Administration, PEXA’s major shareholder on Monday confirmed plans to float the company in an offering valued at $3.3 billion.

Link CEO Vivek Bhatia said in a statement to the ASX that the $3.3 billion valuation had supported the company rejecting previous offers as the right thing to do.

Perhaps that was a misreading of what Link shares were expecting because a session of concentrated selling saw Link shares fall nearly 7% yesterday to $5.08. That more than wiped out Friday’s 5% rise.

Link shares were down almost 4% in the first 10 minutes of trading and almost doubled that loss over the rest of the session.

Don’t be surprised if Link comes under pressure from shareholders for some capital management moves to be announced with the annual results in August.

PEXA is a private company owned by Link, Commonwealth Bank and Morgan Stanley Infrastructure Partners that has gained dominant market share in online property lodgements and settlements since launching in 2010. It has a number of competitors, led by Simpli.

Link has been exploring options to sell its 44% shareholding or publicly list the company on the ASX. That has seen Link subjected to four or five takeover approaches in the past couple of years as mostly foreign and local private equity groups to bid and grab control of PEXA.

They have all failed – mostly because Link has thought the offers were too skinny and undervalued the company in an attempt to get PEXA on the cheap.

As part of the float LINK will increase its shareholding by 3% and get at least $50 million in cash from the float.

The proposed float will now have to go through the usual process and the aim is to list PEXA at the end of June.

The Commonwealth Bank looks like ending up with around 16% while the Morgan Stanley group will reportedly sell into the float.



About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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